Disney: Making Magic
Through Digital Innovation
An Organization that has Taken Digital to Heart
“Any sufficiently advanced technology is
indistinguishable from magic.”- Arthur C.
Clarke
‘Magic’ is something that most people
associate with on-stage performances.
But magic can also result when digital
technology is used in the right place and
with the right goals. Imagine, for instance,
a different kind of restaurant experience.
You enter the establishment, tap your
order into a device, take any seat you
want, and soon after – as if by magic – the
waiter appears at your chosen table and
addresses you by name. Or, you want to
make an impulse purchase, and all it takes
is a tap of your wrist. These experiences –
while reminiscent of the fictitious wave of
a magic wand – are firm reality. They are
very real examples of what has been made
possible by a wrist-band introduced into
its world-famous theme parks by Disney,
an organization that has been part of the
fabric of the entertainment industry for
over 90 years. Technology today comes
naturally to the entertainment giant. As
Bob Iger, Chairman and CEO, Walt Disney
Company says, “Technology is lifting the
limits of creativity and transforming the
possibilities for entertainment and leisure1.”
Parks are only one area where Disney is
using digital technology to sprinkle some
magic onto the customer experience.
Walt Disney Studios recently unveiled
a product – Movies Anywhere – that
lets consumers discover, buy and
watch films across different devices.
The application allows users to digitally
curate a collection of movies that they
have already purchased and can redeem
from their DVD collection. It also includes
controls so that parents can safeguard
the content for their children2.
Technology is lifting
the limits of creativity
and transforming
the possibilities for
entertainment and leisure.
- Bob Iger, Chairman & CEO, Disney
mix and match popular Disney and Pixar
characters in self-constructed video
game adventures. The game cost over
$100 million to develop. It ended 2013
as one of the top 10 best-selling games
in the US and sold over 3 million starter
packs globally3.
These examples from different parts
of the Disney organization illustrate the
company’s overall strategy. Disney is
using digital to engage, entertain and
interact with consumers every day across
its theme parks, studio entertainment,
interactive media platforms and physical
store.
Figure 1: Disney’s Magic Bands
Disney’s video game unit also launched
a game, Infinity, which allows players to
Source: Company press release
2
This approach has required significant
effort and commitment. It is the result of
a sustained vision driven right from the
top, along with significant investments in
technology. The overall strategy has three
pillars, which Bob Iger, CEO of Disney,
summarizes as: “One: Invest most of the
capital in creating high-quality, branded
content and experiences. Two: Embrace
technology and use it aggressively to
enhance the quality of Disney’s product
and thus the consumer experience. And
lastly, get closer to the customer by
becoming more efficient as a company4.”
Disney today is
leveraging digital to
engage, entertain and
interact with consumers
every day across its
theme parks, studio
entertainment, interactive
media platforms and
physical store.
Making Magic With Digital Technologies
Disney’s technology approach was based
on four goals: transforming the customer
experience, driving operational efficiency,
personalization using connected products,
and enhanced interactivity across channels
(see Figure 2).
Analytics helped improve
Disney’s accuracy in
managing labor resources
at its parks by 20%.
Figure 2: Key Digital Levers Deployed by Disney
Improve Customer
Experience
Using Analytics
Enhance Operational
Efficiency
Taking a Data-Driven
Approach
Interactivity
Using Digital Tools
Across Channels
Personalizing
Using Connected
Products
Using Analytics to Improve
Guest Experience
Disney uses data mining to understand
past behavior and preferences of individual
guests. Forecasting models are used to
determine the kind of vacation packages
preferred by guests and help the company
provide targeted hotel offers to its
customers5. Using this model, Disney’s call
centre operators were able to offer families
low-priced hotels available on its list, which
has led to improved repeat business.
This call centre analytics project paid for
itself “10 times over” in the first year of
operation6.
Disney deploys significant real-time analytics
in its day-to-day operations in order to
enhance the customer experience at its
theme parks. One example is forecasting
the waiting time for its various attractions.
Disney’s Fastpass7 means guests can
avoid long queues by giving them a onehour window when they can return to their
chosen attractions without having to wait in
a queue. For those waiting in the regular line,
Disney runs forecasting models that predict
waiting times at popular attractions, with
the output displayed for guests to see. This
means guests can decide whether to enter
the queue, return later or take a Fastpass
ticket8.
Source: Capgemini Consulting Analysis
Taking a Data-Driven Approach to
Operational Efficiency
The scale of Disney’s theme-park
operation is staggering. Each week,
Disney has to pay more than 80,000
cast members and schedule 240,000
shifts. In the words of Juan Gorricho,
Senior Manager, Merchandise Business
Intelligence and Analytics, “we need the
right cast members at the right place
at the right time, and serving the right
guest.” Following the implementation of
a rule-based, on-demand technology,
Disney’s accuracy in managing labor
resources improved by 20%. The project
paid for itself in one year, just from the
labor savings alone9.
sufficient garments are available for its
cast members while ensuring minimum
inventory levels and idle costumes on the
shelf10.
Disney’s call centre
analytics project paid for
itself “10 times over” in
the first year of operation.
Disney also applies analytics to
streamline back-house operations. For
instance, it uses forecasting models
to manage its garment inventory and
laundry. The forecast models ensure
3
Personalizing through Connected
Products
Crunching visitor data to improve the
customer experience is only one part of
the Disney approach. Disney’s MyMagic+
initiative is a billion-dollar investment
that is a combination of a website, a
mobile application and a wristband that
collectively allow visitors to customize
their experience at a Disney park
(see Exhibit 1). The initiative has involved
training 70,000 employees on new
technology, equipping 28,000 hotel room
doors with radio frequency readers, and
installing scanners at its parks, hotels,
shops, and other attractions.
The MyMagic+
initiative helped Disney
accommodate 3,000
additional daily visitors.
The ‘magic’ starts with the booking
process for Disney’s entertainment parks,
where visitors can book tickets through
the website or mobile applications that
are available across platforms. Once
the reservations are made, visitors
receive a MagicBand – a wristband
that is embedded with radio frequency
identification (RFID) chips.
4
This band acts as an admission ticket,
the key to the hotel room, a means of
making purchases at many stores, and as
a FastPass. The MagicBand – in tandem
with mobile apps – give visitors a seamless
experience. Using the MagicBand, guests
can pre-arrange their visit for a number
of attractions, including rides and events
such as character meetings, parades and
fireworks shows. To customize the guest
experience, employees playing characters
at the park can use hidden sensors within
the bands to personally greet a child on his
or her birthday11.
These bands are part of a new “vacation
management system” that can track
guests as they move through the park
and analyze their purchasing habits.
Unlocking these trends in preferences
and habits is of great value to Disney. For
instance, knowing where guests have
shopped – and what items they have
bought – means Disney can offer guests
deals that are tailored to their specific
interests.
Disney’s MyMagic+ is now rolled out to
all resort guests staying at the company’s
35,000 hotel and vacation club rooms.
The company has committed to spend
over $1 billion on the initiative (see
Exhibit 1 for more details). The early
results are promising indeed. Disney was
able to accommodate 3,000 additional
daily visitors during the 2013 Christmas
holiday season12 by effectively managing
advance reservations for rides that are
in high demand. Over 90% of visitors
rated the band as excellent or very
good13. In 2013, theme parks made up a
third of Disney’s $45 billion overall revenue
and over 20% of its operating profit.
Disney attracted over 132 million guests
in 201314.
Disney has invested over
a billion dollars in its
MyMagic+ technology
initiative.
Using Digital to Create New
Interactive Consumer Experiences
Across Channels
The commitment to deliver a superior
customer experience extends beyond
theme parks. Disney has strived to find
new ways for its customers to digitally
interact with different parts of the Disney
family.
As part of that approach, Disney
gave its traditional bricks-and-mortar
stores a high-tech makeover. For
example, the store concept includes
an in-store application for guests to
customize their shopping experience
(see Figure 3). Using an interactive kiosk
with a touch screen, users have the ability
to navigate a 3-D view of all Disney Store
and DisneyStore.com products and
discover the latest Disney Store news
via video clips, articles, and social media
feeds15. The store revamps have helped
boost profit margins by 20%, with over
90% of Disney Store guests in North
America and Europe saying that the new
store design has brought them closer to
the Disney brand16. In the UK, the results
have been more dramatic. In the four
years since the overhaul, stores have
made $761.6 million in revenue, which
peaked at $200.4 million in 201217.
Disney’s store redesigns,
including usage of digital
kiosks, helped it boost
sales and profit margins
by 20%.
Figure 3: Redesigned Disney Store
Source: Disney Store Facebook Page
5
Exhibit 1: MyMagic+ - A Multi-Channel, Multi-Platform Digital
Experience Initiative
Disney’s MyMagic+ Initiative
FastPass+
My Disney Experience
Enables advance
reservation in rides
A mobile app for managing
the visit experience
Magic Bands
RFID bands that unlock hotel rooms
and enable personalized experiences
Source: Company website
Disney’s MyMagic+ is a combination of a website, a mobile application and a wristband that collectively allow visitors
to customize their experience at a Disney park. Visitors make reservations using MyDisneyExperience.com, where
they can choose a place to stay, make dining reservations and schedule visit timings through FastPass+ (a system
that allows guests a one hour window to return to their desired attractions without having to wait in a queue). The
MagicBand has an embedded Radio Frequency Identification (RFID) chip and there are several long-range RFID
readers across the park. The band can be used for a variety of use cases such as entering the park, or rides, or hotel
room, or making purchases, among others. As Tom Staggs, Walt Disney Parks and Resort says, “It takes our cast
members out of transactional mode with our guests and into an interaction mode”.
The bands are uniquely colored and monogrammed with each family member’s name so they do not get switched.
Visitors can link up pictures taken at the park with their MagicBand and access them after their visit. In the future,
more such revenue opportunities can be linked to the band. Disney has committed to spend over $1 billion on
MyMagic+.
Source: Bloomberg Businessweek, “Disney Bets $1 Billion on Technology to Track Theme-Park Visitors”, March 2014;
Los Angeles Times, “Disney Parks chairman shows off Disney MagicBand”, May 2013
6
How Does Disney Make Its Digital Magic?
Disney has created its digital magic
using a number of key ingredients.
These include strong digital leadership, a
far-reaching vision, an analytics culture,
and an ongoing investment in digital
initiatives (see Figure 4).
Disney’s Board of
Directors include top
Internet industry
executives from Facebook
and Twitter.
Figure 4: How Disney Delivers Magic
Strong Digital
Leadership
A
Digital
Vision
An
Ongoing
Investment
In Digital
Disney’s
Digital
Recipe
Digitally-Savvy Leadership
Our research with the MIT Center for
Digital Business has clearly established
that digital transformation is a topdown exercise18. It is imperative that
organizations wanting to transform
digitally have digital-savvy leadership,
including the board of directors19.
Unlike many other boards, Disney ticks
all the right boxes. Its board includes
Jack Dorsey, Executive Chairman and
Founder of Twitter; Facebook COO
Sheryl Sandberg; and former Sybase
CEO, John Chen. As Chairman and
CEO Bob Iger says, “The perspective he
(Jack Dorsey) brings to Disney and its
Board is extremely valuable, given our
strategic priorities, which include utilizing
the latest technologies and platforms
to reach more people and to enhance
the relationship we have with our
customers.20”
A Vision Where Technology Plays a
Key Part
Disney’s CEO has always treated
technology as an opportunity rather
than a threat, saying, “I really believed
the company should look at technology
as a friend21”. This is the same line of
thought that encouraged Disney to have
An Analytics
Culture
Source: Capgemini Consulting Analysis
significant digital talent right at the top, at
the board-level. Even before the current
array of tech’s great and good, Disney
had Apple founder Steve Jobs on its
board. This was a signal of Bob Iger’s
determination to master digital, as he
explained: “Businesses are challenged
left and right and if we did not get on
board and challenge ourselves, we were
going to get swept away. So, we had to
swim with the current.22”
A Governance Structure that Drives
an Organization-Wide Analytics
Culture
To drive the use of analytics across
the organization, Disney hosts an
annual Disney Analytics & Optimization
Summit. A key objective of the summit
is to share new analytics project ideas
and technologies within Disney and
with other like-minded organizations.
The event brings together people with
analytical roles from across the company
with other professionals from outside
Disney. The event examines the feasibility
of analytics initiatives across various
Disney departments and how these
entities could use analytics to transform
areas such as forecasting, marketing,
and revenue management.
Our strategic priorities
include utilizing the
latest technologies and
platforms to reach more
people and to enhance the
relationship we have with
our customers.
- Bob Iger, Chairman & CEO, Disney
7
I really believe the
company should look at
technology as a friend.
- Bob Iger, Chairman & CEO, Disney
An Ongoing Investment in Digital
Disney is clearly determined to uncover
new and innovative ways of engaging
and enhancing the customer experience,
using cutting-edge approaches.
Disney Research, for example, is an
informal collaboration between the
Walt Disney Company and various
academic labs. Some of the areas
that the labs focus on include speech
and
sound
processing,
artificial
intelligence, machine learning, data
mining, materials, displays, sensors, and
embedded systems. Recent research
includes tactile rendering of 3D features
on touch surfaces, where an algorithm
can simulate surface friction of a virtual
object on a touch screen23. Another
research project is using 3D Printing
to produce interactive speakers of any
shape24. This initiative dates back as
far as 2008, signaling the company’s
early determination to stay ahead of the
curve25.
8
Disney has also partnered with TechStars,
a start-up accelerator. The idea is to identify
a number of companies that will be offered
access to the creative expertise and resources
of Disney to create the next generation of
entertainment products and experiences.
The initiative was launched in June 2014
and currently encompasses 10 companies
over a period of 15 weeks26. Participants
include ChoreMonster, a company that has
a suite of web and mobile apps that make
regular chores fun for kids; Tyffon, a mobile
app company that boasts over 25 million
total downloads; and Spherro, which makes
connected toys that use a combination of
robots and software to create new gaming
experiences.
Disney has always been about magic,
right from its inception. And now, it is an
organization that is fiercely determined to
use digital transformation to maintain and
enhance that tradition for its customers.
And it’s not an organization that is
content with what it has achieved so
far. In fact, it always has one eye on the
future, as Bob Iger says: “Entertainment
will be immeasurably enhanced with
both virtual-reality experiences and
augmented-reality experiences. Bringing
us into created worlds and bringing
created worlds into our world will
fundamentally explode the boundaries of
storytelling, unburdening the storyteller
in ways we can’t yet imagine27.” And as
long as Disney continues to embrace
technology with such passion, they will
continue to make digital magic across
the world.
…Businesses are
challenged left and right
and if we did not get
on board and challenge
ourselves, we were going
to get swept away. So,
we had to swim with the
current.
- Bob Iger, Chairman & CEO, Disney
References
1
Wall Street Journal, “Disney’s Iger on the Future of Leisure: Technology Built on Storytelling”, July 2014
2
TechCrunch, “Disney Launches Disney Movies Anywhere, An iTunes-Integrated App Where Fans Can Build Their Movie Library”,
February 2014
3
New York Times, “Disney’s Troubled Gaming Unit Finds Success With Infinity”, January 2014
4
ChiefExecutive.Net, “How Bob Iger Remade the House That Walt Built”, July 2014
5
INFORMS Roundtable, “How Analytics Enhance the Guest Experience at Walt Disney World”, 2012
6
CIO, “Disney World Parks and Resorts mines magic from business analytics”, November 2012
7
Fastpass - a system that allows guests a one hour window to return to their desired attractions without having to wait in a queue
8
INFORMS Roundtable, “How Analytics Enhance the Guest Experience at Walt Disney World”, 2012
9
Amdocs Blogs, “The Wonderful World of Disney Analytics”, June 2014
10 Informs, “Corporate Profile: How analytics enhance the guest experience at Walt Disney World”, October 2012
11 New York Times, “At Disney Parks, a Bracelet Meant to Build Loyalty (and Sales)”, January 2013
12 Bloomberg Businessweek, “Disney Bets $1 Billion on Technology to Track Theme-Park Visitors”, March 2014
13 Disney Q3 2014 Analyst Call
14 Themed Entertainment Association, “The Global Attractions Attendance Report”, 2014
15 DBTN, “Disney Store Celebrates Grand Opening of New Store Design”, June 2010
16 Office, “Disney Store - Re-imagining a retail experience”, 2014
17 Forbes, “Magical Makeover Drives Disney Store Revenue To $760 Million In The UK”, September 2014
18 Capgemini Consulting and MIT Center for Digital Business, “The Digital Advantage: How Digital Leaders Outperform their Peers in
Every Industry”, November 2012
19 For more details, see – HBR Blogs, “It’s Time for Boards to Cross the Digital Divide”, July 2014
20 Company press release
21 HBR, “The HBR Interview: Technology, Tradition, and the Mouse”, July 2011
22 Recode, “Disruption “In Our Face” — Iger on Why Disney Needs Tech Heavies on Board More Than Ever”, January 2014
23 3D Tablets, “How Users Might Feel 3D Objects on Future iPads”, October 2013
24 Business Standard, “Now, 3-D printing to produce interactive speakers of any shape”, April 2014
25 Company website
26 Company website
27 Wall Street Journal, “Disney’s Iger on the Future of Leisure: Technology Built on Storytelling”, July 2014
9
Authors
Jerome Buvat
Head of Digital Transformation
Research Institute
[email protected]
Subrahmanyam KVJ
Manager, Digital Transformation
Research Institute
[email protected]
Digital Transformation
Research Institute
[email protected]
For more information contact
United Kingdom
Didier Bonnet
[email protected]
United Kingdom
Jerome Buvat
[email protected]
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